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Global Strategies and the MNC

Global Strategies and the MNC. Shea Gordon Kyle Harris Bradley Peters Matthew Powers. IKEA’s International Strategy. A brief company history Pattern of Internationalization Challenges of Internationalization Tastes changes from culture to culture Adaptation was necessary

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Global Strategies and the MNC

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  1. Global Strategies and the MNC Shea Gordon Kyle Harris Bradley Peters Matthew Powers

  2. IKEA’s International Strategy • A brief company history • Pattern of Internationalization • Challenges of Internationalization • Tastes changes from culture to culture • Adaptation was necessary • Recent struggles moving to China

  3. Patterns of Internationalization Sheltered Industries Trading Industries Multidomestic Industries Global Industries

  4. Analyzing Competitive Advantage in an International Context • National Influences on Competitiveness • Comparative Advantage • Firm Resources and Capabilities • The Industry Environment • The National Environment

  5. Porter’s National Diamond Factor Conditions Related and Supporting Industries Demand Conditions Strategy, Structure, and Rivalry

  6. Intel Diamond Model Factor Conditions Related and Supporting Industries Strategy, Structure, and Rivalry Demand Conditions • Easy and cheap materials • Well-educated work force • Difficult to imitate product • Slowing PC growth • Must look to foreign countries for supplies. • Slowing growth in PC market • “evolving market trends” • Growing competition for superconductors • Little rivalry for microprocessors • Move to open mobile platforms

  7. Applying the Framework: International Location of Production National resource availability Firm-specific competitive advantage Tradability Political Considerations

  8. Location and Value Chain • Seek countries whose resource availability and cost best match each stage of the value chain • Cost factors: • Availability of resources • Quality of resources and capabilities

  9. Entering Foreign Markets

  10. Entering Foreign Markets: Cont.

  11. Five Key Factors for Market Entry Is the firm’s competitive advantage based on firm specific or country specific resources? Is the product tradable and what are the barriers to trade? Does the firm possess the full range of resources and capabilities for establishing a competitive advantage in the overseas market? Can the firm directly appropriate the returns to its resources? What transaction costs are involved?

  12. Multinational Strategies Global Integration Vs. National Differentiation Global Wins for 2 Reasons Economies of Scale Local customer preferences are disappearing

  13. 5 Benefits of Global Strategy Cost Benefits of Scale and Replication Serving Global Customers Exploiting National Resources Learning benefits Competing Strategically

  14. Need For National Differentiation National Differences in Customer Preferences continue to exert a powerful influence in most markets

  15. Global Game with National Differentiation • New Skins in new Regions • Global Competitive Scene

  16. Reconfiguring the MNC: the Transnational Corporation • Changing Organization Structure: national to worldwide • New Approaches to reconciling localization and global integration. Necessities for this: • Each unit is a source of ideas, skills, capabilities • National units become source for particular product • The center has a highly complex managing role

  17. Reconfiguring the MNC cont. • Transnational firm is a concept rather than archetype • MNC’s are increasingly locating management outside home • Nexans head of shipbuilding cables moves to South Korea • Biggest challenge of MNC’s: integrating innovation globally

  18. Summary Moving internationally increases complexity Companies can enter markets globally by exporting, licensing, or directly investing National differences pressures companies to adapt Global integration requires companies to become transnational

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